Monday, February 17, 2014

Building Aggregate Agility ... By Continuously Tuning Increasing Numbers of Inter-Dependency Functions ... With Increasing Numbers of Automatic Stabilizers

Finance and Economics Discussion SeriesDivisions of Research & Statistics and Monetary AffairsFederal Reserve Board, Washington, D.C.
Inequality and Poverty in the United States: the Aftermath of the Great Recession - July, 2013 

Washington U faculty papers
Inequality, the Great Recession, and Slow Recovery - Jan, 2014

What do these data mean to you?

To me, they're simply interesting data, produced too slowly to be of functional use in a still missing RESPONSE to changing context.

What are we doing here? How are we doing it? And why are we waiting so long?

Instead of documenting the bad outcomes, why aren't we just focussing on improving policy in real-time?

Something is completely out of whack in our policy apparatus, and our civics.

We would NOT use economics to train jugglers! Why try to use them to advise policy development - which must, by definition, be either agile, or irrelevant?

No offense to economists ..... but the entire field of economics could - eventually - precisely document how every war was lost, but couldn't EVER actually win one, since that requires practice at a different skill set?

How does economics help us succeed at juggling, or even in real-time operation of a business venture? Let alone national policy?

This situation should make all citizens realize that the economics profession can never instruct us on how to ride a bicycle. It can only precisely document (eventually) why we fall off? :)

Let's get real. The act of falling off a bike is self-documenting.

As are depressions. 

Keeping an aggregate on a bike (or any growth path) requires us to constantly train increasing numbers of automatic stabilizer functions to respond and adjust in real-time ... to real-time data sets, called feedback.

Keeping all feedback data sets within tolerance limits is how complex systems juggle internals in order to survive context. To ALWAYS ensure that ALL internal functions can be kept within local tolerance limits, we
1) generate tremendous diversity, and
2) generate large numbers of inter-dependencies, and
3) demand distributed - i.e., "fiat" - adjustments to adequately distributed feedback,
4) all in order to thereby maintain distributed, systemic resiliency.

That is what agile aggregates, and Democracies, do - when they survive.

And they do it all in either real time ... or else.

The logic of social species is to guarantee survival of all components PLUS the aggregate, by distributing all stresses experienced by the aggregate. If all components adjust a little, then no component EVER need be stressed beyond survival tolerance limits.

So why on earth are we killing our MiddleClass? Is there a plan? Some Desired Outcome? Whose?

Social organization boils down to building aggregate agility by continuously tuning increasing numbers of inter-dependency functions. That's not rocket-science, only distributed PLUS aggregate practice at tuning inter-dependencies.

Where does the field we call economics fit in this social logic? 

Seriously. The very application of orthodox economics is entirely too academic, and inadequately operational. Since our context changes unpredictably, our aggregate reality is that NO model of anything works for more than a fleeting instant. Survival is a dynamic, unpredictable art of extension by highly distributed innovation, and NEVER a static model.

Just set functional tolerance limits for all components ... including education, nutrition, liquidity, employment .... and let distributed, not concentrated, adjustments be mediated through existing and added Automatic Stabilizers. It should be easy.

Where does that leave the entire field of economics? It has clearly been a colossal, operational mistake to even attempt to use economists in policy offices, rather than just having them tally accounting reports after the fact, and spend more time on the golf course.

Accounting & economics involve fairly boring tracking of basic fundamentals, and NOT dynamic exploration of emerging options.

Our survival is a simple question of keeping boring fundamentals separate from the emerging options which we must explore?

That means setting goals, keeping boring fundamentals as fundamentals vs dynamics, and making any and all distributed adjustments IN REAL TIME, that are necessary for aggregate exploration of aggregate options.

Once seen that way, our key Desired Outcome is to maintain aggregate resiliency precisely by maintaining all of our social components - and especially our Middle Class - safely within operational tolerance limits.

If all citizens focus on avoiding application of excessive stress on other citizens, then we'll never have to worry about our aggregate resiliency. That is the logic of all aggregates.

It is the logic of social species.

It's also the logic of statistical process control (distributed control of net variance).

And the logic of diverse expressions of military science (force readiness by managing frictions generated while aligning highly distributed decision-making). Believe it or not, armies at war are much more democratic than our electorate at home.

And, by the way, it is the logic of using automatic stabilizers in fiscal and social policy.

In conclusion, to maintain National Security as national resiliency, functional policies are those that 

a) provide us with freedom to execute distributed expression of more Automatic Stabilizers, and 

b) guarantee us freedom from the stress inherent in the clash of random ideology. 

In short, make coordination of a more perfect union, not civil or class war.

Building Aggregate Agility ... By Continuously Tuning Increasing Numbers of Inter-Dependency Functions ... With Increasing Numbers of Automatic Stabilizers.

That is what evolving systems do. That's all they do. That simple logic allows evolving systems to solve seemingly any challenge ..... by throwing more nested layers of the same logic at whatever options emerge.

Any and all ideology just gets in the way, and slows down distributed adjustments.

Why can't we teach this simple paradigm, to all students, by age 10?